UAE Small Business Relief Extended to 2029: AED 3 Million Threshold and Filing Guide

The UAE has extended Corporate Tax Small Business Relief for eligible Tax Periods ending on or before 31 December 2029. The revenue threshold remains AED 3 million, giving qualifying resident businesses three additional years to use the simplified relief.

The Ministry of Finance announced the extension on 7 August 2026 through Ministerial Decision No. 131 of 2026. The relief was previously available only for eligible Tax Periods ending on or before 31 December 2026. The extension does not make the relief automatic: a business must remain eligible and elect for it in its Corporate Tax Return for each relevant Tax Period.

What did the UAE change in 2026?

The deadline changed; the AED 3 million revenue threshold did not. The relief continues to apply to eligible Tax Periods beginning on or after 1 June 2023, but the last eligible Tax Period may now end as late as 31 December 2029.

For a company with a calendar financial year, this can include the years ending 31 December 2027, 2028 and 2029. A business with a different financial year should check the actual end date of each Tax Period rather than assuming the calendar-year treatment applies.

Who can claim UAE Small Business Relief?

A Person must meet all applicable conditions, including the following core tests:

• It is a Resident Person for UAE Corporate Tax purposes.
• Its Revenue is AED 3 million or less in the relevant Tax Period.
• Its Revenue was AED 3 million or less in every previous Tax Period.
• It is not a Qualifying Free Zone Person.
• It is not a member of a Multinational Enterprise Group required to prepare a country-by-country report.

Resident juridical persons and eligible resident natural persons may qualify. However, the Corporate Tax rules for natural persons have their own scope and registration tests; personal salary, private investment income and qualifying real-estate investment income should not simply be mixed with business Revenue.

The AED 3 million test is based on Revenue, not profit

A common mistake is to compare the threshold with taxable profit or net income. The test uses Revenue determined under applicable accounting standards. A business with AED 3.4 million of sales and only AED 100,000 of profit does not meet the revenue condition.

The historical test is also important. If Revenue exceeded AED 3 million in an earlier Tax Period, falling below AED 3 million later does not restore eligibility under the current rules.

What does the relief provide?

An eligible business that makes a valid election is treated as having no Taxable Income for that Tax Period. It therefore does not calculate taxable income or pay Corporate Tax for that period, and it completes fewer fields in its Tax Return.

This is a compliance simplification, not an exemption from the Corporate Tax system. The business must still register when required, keep adequate records, file its return by the statutory deadline and make the election correctly.

What the relief does not remove

• Corporate Tax registration: eligible Taxable Persons must still register when required.
• Tax Return filing: a simplified return must still be submitted, generally within nine months after the Tax Period ends.
• Record keeping: books and evidence must support Revenue and eligibility.
• Arm's-length principle: transactions with Related Parties and Connected Persons must still follow it.
• VAT and other obligations: Small Business Relief applies to Corporate Tax; it does not cancel VAT, payroll, licensing or other compliance requirements.

Should every eligible business elect?

Not necessarily. A valid election means other Corporate Tax exemptions, reliefs and deductions generally do not apply for that Tax Period. Tax losses incurred during a relief period cannot normally be accrued for later use, and the treatment of net interest expenditure can also affect future periods.

A loss-making or rapidly growing business should compare the immediate simplicity of the relief against the value of losses or deductions it may otherwise carry forward. The decision should be documented before filing.

Anti-fragmentation rule: do not artificially split a business

The legislation contains an anti-abuse rule where business activities are artificially separated between Persons to keep Revenue below AED 3 million. The FTA may treat the arrangement as one business and deny relief when the separation is artificial.

Common ownership alone does not automatically prove artificial separation. However, shared management, customers, premises, employees, branding, systems and contracts can be relevant. Connected businesses should keep commercial evidence explaining why each entity exists and operates separately.

Step-by-step filing checklist

1. Confirm residency and status. Establish that the claimant is an eligible Resident Person and is not excluded.
2. Review every Tax Period. Check Revenue for the current period and all previous Corporate Tax periods.
3. Reconcile Revenue. Tie the threshold calculation to the financial statements and accounting records.
4. Assess connected businesses. Document genuine commercial separation and related-party transactions.
5. Compare the alternatives. Consider losses, interest deductions and expected growth before electing.
6. Prepare the return. Complete the simplified fields and make the Small Business Relief election.
7. File on time. Do not assume a nil Corporate Tax bill means no return is due.
8. Retain evidence. Keep ledgers, invoices, statements, calculations and eligibility analysis.

Documents to keep

• financial statements and trial balances;
• general ledgers and sales reports;
• bank statements and customer invoices;
• revenue reconciliations for each Tax Period;
• Corporate Tax registration and filed returns;
• related-party and connected-person records; and
• the written assessment supporting the election.

Frequently asked questions

Has the threshold increased above AED 3 million?

No. The 2026 decision extended the availability of the relief to eligible Tax Periods ending on or before 31 December 2029. The Revenue threshold remains AED 3 million.

Is Small Business Relief automatic?

No. An eligible business must elect for the relief in its Corporate Tax Return for each Tax Period.

Does an eligible business still file a return?

Yes. The FTA confirmed in September 2026 that eligible persons must submit simplified Corporate Tax Returns within the prescribed deadline.

Can a Qualifying Free Zone Person elect?

No. A Qualifying Free Zone Person is excluded. A Free Zone Person whose status or tax treatment is uncertain should obtain advice based on its activities and elections.

What if Revenue exceeded AED 3 million once?

Under the current cumulative test, exceeding AED 3 million in a previous Tax Period prevents the business from claiming the relief in a later period, even if Revenue subsequently falls.

Prepare before the return deadline

The extension is valuable, but eligibility depends on accurate Revenue records and a valid election. Review the position before preparing the return rather than treating Small Business Relief as an automatic zero-tax outcome.

For more background, read our UAE Corporate Tax guide for small businesses and our Corporate Tax Return filing checklist. Al Shamil Zone can assist with Corporate Tax registration, bookkeeping, return preparation and compliance reviews. Contact our team for support.

Official sources

• Ministry of Finance: Small Business Relief extended to 31 December 2029
• Federal Tax Authority: Small Business Relief overview
• Federal Tax Authority: Small Business Relief Guide
• Federal Tax Authority: September 2026 filing reminder

Reviewed on 8 October 2026. This article is general information, not tax or legal advice. Eligibility and the effect of an election depend on each business's facts and the legislation and guidance in force when its return is filed.